live_tv
Livestream Starting Soon
00
Hours
:
00
Minutes
:
00
Seconds
Up next in 10
Economic growth is the only show in town, but where is it? And where does it come from?
In this instalment of Week in Business, City AM editor-in-chief Christian May is joined by the author and political strategist Matthew Elliott to discuss exactly this.
Read more at the link in the description.
#economy #news #politics #uknews #growth
Show More Show Less View Video Transcript
0:00
Economic growth. It's the only show in
0:02
town. But where is it? Where does it
0:04
come from? Well, today I'm joined by
0:06
somebody who thinks he's found some
0:08
answers. Welcome to the week in business
0:09
with me, Christian May.
0:14
Matthew Elliot, Lord Elliot, author, one
0:17
of a handful of authors of this book,
0:20
Prosperity Through Growth.
0:24
Tell us how urgent is this task?
0:27
It's really urgent to get growth. I
0:29
mean, if you look at our um GDP per
0:31
capita, our living standards, they're
0:33
still below where they were pre-COVID.
0:36
So, we haven't actually made up for the
0:37
COVID um dip. So, it's really crucial
0:40
now. And we did some forecasting for the
0:42
book. Um and we actually found out that
0:45
if we continue as we are on the current
0:47
trajectory, we're going to see the UK
0:49
fall behind um Lithuania very soon, fall
0:52
behind Poland by 2034, and even fall
0:55
behind Turkey by 2043. So something
0:58
needs to be done to keep our top spot at
1:00
the world table.
1:01
But you say that we've got problems
1:02
postco. This goes way back, doesn't it?
1:04
I mean since 2008 at least. And I'm sure
1:08
people can draw back even further than
1:10
that. But we've had a real problem with
1:12
the level of growth in this country
1:14
which has barely ticked above sort of
1:16
2%. What's the kind of level of of solid
1:19
GDP growth in a year that that we would
1:22
feel that would really imply that our
1:25
engines were firing on all cylinders?
1:27
What should we be aiming for?
1:28
Well, if you go back to the 1980s and
1:30
1990s, we were going out about um two
1:33
two and a half 3% a year. And the key
1:37
ingredient there is following what we
1:38
call the north star of economic growth
1:40
in there. And one of the co-authors is
1:42
Dr. Arfa Lafer of the Laffer Curve fame.
1:46
And he has these five ingredients for a
1:48
growing economy.
1:50
Low tax, low government spending, smart
1:53
regulation, free trade, and sound money.
1:56
And if you get all of those ingredients
1:58
right, whether the the UK in the 1980s
2:00
and 90s or the US or indeed other
2:03
countries who followed that north star,
2:05
you get fast growth.
2:06
Okay. So there's five key ingredients.
2:08
We don't have time today to go through
2:09
them all, but perhaps another time, but
2:10
let's pick up on a couple. You talked
2:12
about government spending. Yes.
2:13
We've had the figures out just this
2:14
week. This confirmed what we've long
2:16
known. We're borrowing about a hundred
2:18
billion pounds this year. We're paying
2:21
about a hundred billion on our debt
2:23
interest on top of that.
2:26
People look back at what they call
2:27
austerity under previous conservative
2:30
administration, George Osborne, David
2:32
Cameron. Are we saying that we just need
2:34
to enter a period of belt tightening or
2:36
do we need some more fundamental reform
2:38
to what the state does and how it's
2:40
funded?
2:40
I think we need some fundamental reform.
2:42
You can't have a situation where um
2:44
government spending is running at um you
2:46
know roughly 45% of GDP and we're
2:48
bringing in 40% of GDP in terms of tax.
2:50
You can't have that level of um deficit
2:52
going on year after year. And we look at
2:54
things like welfare spending for example
2:56
in the book in our 247 growth plan. And
2:59
we basically say freeze it in real terms
3:01
from the 2019 levels. So for example,
3:04
you could do that quite easily by for
3:06
example bringing in bringing back
3:08
in-person consultations when you get new
3:10
benefits. at the moment is on the
3:12
telephone, very open to fraud, bring
3:14
back in-person consultations with a
3:16
trained medic and you soon see the
3:18
welfare bills go down.
3:19
Okay. You say you could do it quite
3:20
easily, but this government tried to
3:23
shave 5 billion quid off the uh vast
3:26
welfare bill not that long ago and their
3:28
own MPs said, "No, that's not what we
3:30
came into politics to do. We think that
3:32
she's going to try and do something
3:33
around welfare again in the uh budget
3:35
next month." But you're not talking
3:37
about, you know, three billion here, two
3:39
billion here, are you? you if the
3:40
welfare bill has is is is gone up I
3:43
think sort of 40 odd billion in real
3:45
terms over the last two years um you're
3:47
obviously talking about something much
3:48
more fundamental than just trying to
3:50
rein in that increase I mean the
3:52
government came in with their plan of
3:54
having you know growth as the number one
3:56
priority and when they announce the
3:57
manifesto they're going to say wealth
3:59
creator will be center of um you know
4:00
government that really hasn't happened
4:03
for the book we spoke to um five former
4:05
prime ministers both Tory and Labour and
4:08
nine former chancellors to get their
4:10
take on the politics of growth. How do
4:11
you implement a progrowth plan? And what
4:14
they all said was basically you need to
4:16
have that clear plan ahead of coming
4:17
into office
4:18
which of course Labour didn't. They they
4:20
had very little plan
4:21
which is really disappointing. But go
4:22
back to the 1990s when Tony Blair came
4:25
in to his credit Tony Blair Gordon Brown
4:27
had that clear plan of basically
4:29
matching Ken Clark spending plans
4:31
bringing in quite a minimal minimum wage
4:34
if you like making the banking
4:35
independent and allowing the city to
4:37
flourish and really drive the UK
4:39
economy. That was a plan. I wish this
4:41
government had a plan but it's not too
4:42
late.
4:42
So we talked a little bit about um
4:44
government spending. Let's talk about
4:45
tax as well, which I know is not an area
4:47
you spent a vast part of your career
4:49
agitating on. Uh 40 billion quid in tax
4:52
rises in Rachel Ru's first budget. We're
4:54
expecting 20 odd billion, if not more uh
4:56
in the upcoming budget. She says it's
4:58
going to be focused on the wealthy. Uh
5:00
last year's was focused very much on
5:02
business. Are we just on this escalator
5:05
of ever higher taxes to fund an ever
5:07
bigger state? We can't we just can't get
5:09
off it. Well, if the government tries to
5:12
raise taxes in the budget, they won't
5:13
get the revenues they're expecting
5:15
because of course people are now highly
5:17
mobile. And one of the things other
5:18
things we look into which I know CCM has
5:20
talked a lot about is the number of
5:22
millionaires and high net worths now
5:24
leaving the country. it's very easy to
5:26
relocate to uh Milan and pay €200,000
5:29
euros a year to live there or Portugal
5:31
or Dubai and all these other cents are
5:34
attracting the very entrepreneurs and
5:36
investors and wealth creators who we
5:38
need here in the UK to drive the UK
5:40
economy.
5:40
Okay. So, I was just looking. You spoke
5:43
to people from the left and the right.
5:45
Um, prime ministers, chancellors. You
5:47
spoke to Andy Haldane, a very thoughtful
5:49
guy. You spoke to Gus O'Donnell, former
5:51
top civil servant. You spoke to Jamie
5:53
Diamond. He's he's always got a few
5:54
things to say.
5:56
What did they all have anything in
5:57
common? And did any of them surprise you
5:59
with with their own thoughts or
6:00
reflections?
6:02
I would say that one key thing they all
6:03
had in common was that something needed
6:06
to be done. And actually, the um safer
6:08
option was to do something. If we carry
6:10
on this current trajectory, the current
6:12
path of decline and sort of all fighting
6:15
over, you know, rising populations,
6:17
growing smaller pie, if we keep on that
6:19
fighting, that's the less safe path. So,
6:22
we need to go for growth. We need a
6:24
growth plan as as a country. We need to
6:26
join together both left and right to
6:27
make sure that plan is in place to keep
6:29
the UK at the top of the table.
6:31
Well, I can tell you's going to give
6:33
this a decent review. Um, and it's had a
6:36
lot of press and and a lot of stories
6:38
have come out of it and it's generated a
6:39
lot of debate. I was mildly tickled to
6:42
see that the Financial Times reviewed it
6:43
and described it as a curious collection
6:45
of old ideas. What do you make of that?
6:48
Well, they say all publicity is good
6:49
publicity. So, we thank the FD for their
6:51
review. I would note they gave a very
6:54
glowing review, Marty Wolf did, to um
6:56
Thomas Piky's book Capital. And you
6:58
might actually say that that book is
7:00
actually behind the economic hole we're
7:03
now in. that was behind the modern money
7:05
theory, the big tax rise on the rich. So
7:08
the the whole is down to his book in
7:10
many ways. So I hope they will look at
7:12
our book fresh and actually realize if
7:14
we want to get on a good path in the UK,
7:16
we need some fresh ideas.
7:17
All right, fresh ideas. This book's full
7:19
of them. Thank you very much, Matthew
7:20
Elliot. Thanks for coming on the weekend
7:22
business.
7:22
Thank you. Now, here's a postcript for
7:25
you. There's one or two hangovers in the
7:27
city office today, though not with me.
7:29
Uh, City A threw an extraordinary party
7:32
last night to celebrate the Toast the
7:34
City Awards, the best restaurants, bars,
7:36
coffees, and cocktails in the square
7:38
mile. It was an incredible night. And it
7:39
reminds me to point out that uh one of
7:42
the restaurants nominated, I think last
7:44
night for an award uh is the only
7:45
Michelin starred seafood restaurant here
7:47
in the city, Angler. Uh, and at
7:49
citywinners, citywinners.co.uk, you can
7:52
enter to win a table and an
7:54
extraordinary feast and experience at
7:56
Angler Michelin star seafood restaurant.
7:57
So, have a look at that. And also, I
7:59
think it's not too late to point out
8:00
that you can still get your hands on
8:01
those VIP hospitality tickets for
8:04
England, Australia at Twickenham. That's
8:06
citywinners.co.uk.
8:10
Go to citywinners.co.uk.
8:13
Good luck.
#Business Finance
#Finance
#Government